11/11/21
“As many as 90% of spreadsheets contain a mistake”
mgr’s financial controller, Thomas Edmunds, contributed to the ICAEW’s latest thought leadership publication, “How to review a spreadsheet”.
The guide focuses on five main review stages:
- Initial review: checking the initial impression of the state of the workbook.
- Structural review: checking that the spreadsheet is well laid out and includes appropriate checks.
- Data review:checking the validity of the input data used in the spreadsheet.
- Analytical review:checking if the spreadsheet’s output looks reasonable at a holistic level.
- Detailed review: checking the spreadsheet at a more detailed level, including at the individual formula level.
Several types of errors can occur within a spreadsheet, and these might include:
- Data integrity errors – the source information is incorrect, leading to the infamous problem of “garbage in, garbage out”.
- Formula errors – the data is incorrectly used in calculations, providing flawed results. Some of these errors can be detected during development and application by employing quality control techniques that consist of built-in tests (such as a check or flag that indicates whether the balance sheet balances).
- Process errors – the spreadsheet’s management is compromised through errors, such as using an incorrect version of the spreadsheet.
- Communication errors – the spreadsheet is misleading, or its results are not presented or explained well.
- Meta errors – these exist outside the scope of the spreadsheet’s cells. For example, where a spreadsheet is not the best tool to answer the question at hand, or the question is not the right one to ask. These issues should be considered early on to avoid wasting
Thomas’s contributions were primarily focused on spreadsheets typically found in a small practice environment, for example, exporting data from accounting systems, checking lead schedules agree, etc.
To read the full publication covering why spreadsheets need reviewing and how to review a spreadsheet, download the pdf here.
